FORM OF PARTICIPATION AGREEMENT
AMONG
PILGRIM VARIABLE PRODUCTS TRUST
AND
[INSURANCE COMPANY]
AND
ING PILGRIM SECURITIES, INC.
THIS AGREEMENT, made and entered into as of this ____ day of April,
2001, among [Insurance Company] (the "Company"), a life insurance company
organized under the laws of [insert state], on its own behalf and on behalf of
each separate account of the Company as set forth on Schedule A hereto, as such
Schedule may be amended from time to time (each such account hereinafter
referred to as the "Account"), PILGRIM VARIABLE PRODUCTS TRUST (the "Trust"), an
open-ended management investment company and business trust organized under the
laws of Massachusetts, and ING PILGRIM SECURITIES, INC. (the "Distributor"), a
corporation organized under the laws of the State of Delaware.
WHEREAS, the Trust is an open-end diversified management investment
company and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into Participation Agreements with the Trust and
the Distributor (the "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each designated a "Fund" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Trust may rely on an order ("ING Variable Insurance Trust,
ET AL., Investment Company Act Rel. No. 24439 (May 3, 2000)) from the Securities
and Exchange Commission ("SEC"), granting the variable annuity and variable life
insurance separate accounts participating in the Trust exemptions from the
provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the Investment Company
Act of 1940, as amended (the "1940 Act"), and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Trust
to be sold to and held by variable annuity and variable life insurance separate
accounts of the Participating Insurance Companies (the "Mixed and Shared Funding
Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (the " 1933 Act"); and
WHEREAS, the Company has registered or will register certain variable
life contracts under the 1933 Act and applicable state securities and insurance
law; and
WHEREAS, the Company represents herein that each Account is a duly
organized, validly existing separate account, which was established by
resolution of the Board of Directors of the Company, on the dates shown for such
Accounts on Schedule A hereto, to set aside and invest assets attributable to
one or more variable insurance contracts (the "Contracts"); and
WHEREAS, the Company has registered or will register the Accounts as
unit investment trusts under the 1940 Act; and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a
member in good standing of the National Association of Securities Dealers, Inc.
(the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in certain Funds
("Authorized Funds") on behalf of each Account to fund certain of the Contracts
and the Distributor is authorized to sell such shares to unit investment trusts
such as each Account at net asset value;
NOW, THEREFORE, in consideration of the promises herein, the Company,
the Trust and the Distributor agree as follows:
ARTICLE I
SALE OF TRUST SHARES
1.1. The Distributor agrees, subject to the Trust's rights under
Section 1.2 and otherwise under this Agreement, to sell to the Company those
Trust shares representing interests in Authorized Funds which each Account
orders, executing such orders on a daily basis at the net asset value next
computed after receipt by the Trust or its designee of the order for the
shares of the Trust. For purposes of this Section 1. 1, the Company shall be
the designee of the Trust for receipt of such orders from each Account and
receipt by such designee shall constitute receipt by the Trust; provided that
the Trust receives notice of such order by 10:00 a.m. Eastern time on the
next following Business Day. "Business Day" shall mean any day on which the
New York Stock Exchange ("NYSE") is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the SEC. The initial
Authorized Funds are set forth in Schedule B, as such schedule is amended
from time to time.
1.2. The Trust agrees to make its shares available indefinitely
for purchase at the applicable net asset value per share by the Company and
its Account on those days on which the Trust calculates its net asset value
pursuant to the rules of the SEC and the Trust shall use reasonable efforts
to calculate such net asset value on each day the NYSE is open for trading.
Notwithstanding the foregoing, the Trustees of the Trust (the "Trustees") may
refuse to sell shares of any Fund to the Company or any other person, or
suspend or terminate the offering of
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shares of any Fund if such action is required by law or by regulatory
authorities having jurisdiction over the Trust or if the Trustees determine,
in the exercise of their fiduciary responsibilities, that to do so would be
in the best interests of shareholders.
1.3. The Trust and the Distributor agree that shares of the
Trust will be sold only to Participating Insurance Companies and their
separate accounts and other persons who are permissible investors consistent
with the Accounts meeting the requirements of Treas. Reg. 1.817-5. No shares
of any Fund will be sold directly to the general public.
1.4. The Trust shall redeem its shares in accordance with the
terms of its then-current prospectus. For purposes of this Section 1.4, the
Company shall be the designee of the Trust for receipt of requests for
redemption from each Account and receipt by such designee shall constitute
receipt by the Trust; provided that the Trust receives notice of such request
for redemption by 10:00 a.m., Eastern time, on the next following Business
Day.
1.5. The Company shall purchase and redeem the shares of
Authorized Funds offered by the then-current prospectus of the Trust in
accordance with the provisions of such prospectus.
1.6. The Company shall pay for Trust shares on the next Business
Day after an order to purchase Trust shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire.
1.7. Issuance and transfer of the Trust's shares will be by book
entry only. Share certificates will not be issued to the Company or to any
Account. Shares ordered from the Trust will be recorded as instructed by the
Company to the Distributor in an appropriate title for each Account or the
appropriate sub-account of each Account.
1.8. The Distributor shall furnish prompt notice (by wire or
telephone, followed by written confirmation) to the Company of the
declaration of any income, dividends or capital gain distributions payable on
the Trust's shares. The Company hereby elects to receive all such income
dividends and capital gain distributions as are payable on the Fund shares in
additional shares of that Fund. The Company reserves the right to revoke this
election and to receive all such income dividends and capital gain
distributions in cash. The Distributor shall notify the Company of the number
of shares so issued as payment of such dividends and distributions.
1.9. The Distributor shall make the net asset value per share
for each Fund available to the Company on a daily basis as soon as reasonably
practical after the Trust calculates its net asset value per share, and each
of the Trust and the Distributor shall use its reasonable best efforts to
make such net asset value per share available by 6:00 p.m., Eastern time, but
in no event later than 7:00 p.m., Eastern time, each Business Day.
1.10. Any error in the calculation of the net asset value,
dividend and capital gain information greater than or equal to $0.01 per
share of the Trust's shares, shall be reported immediately upon discovery to
the Company. Any error of a lesser amount shall be corrected in the next
Business Day's net asset value per share for the Trust. Any such notice will
state for each day for which an error occurred the incorrect price, the
correct price and, to the extent communicated to the Trust's shareholders,
the reason for the price change. The Company may send this notice or a
derivation thereof (so long as such derivation is approved in advance by the
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Distributor) to contractowners whose accounts are affected by the price
change. The parties will negotiate in good faith to develop a reasonable
method for effecting such adjustments. The Trust shall provide the Company,
on behalf of the Account or the appropriate subaccount of each Account, with
a prompt adjustment to the number of shares purchased or redeemed to reflect
the correct share net asset value.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that
(a) at all times during the term of this Agreement, the
Contracts are or will be registered under the 1933 Act; the Contracts will be
issued and sold in compliance in all material respects with all applicable
laws and the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a separate account under
applicable law and has registered or, prior to any issuance or sale of the
Contracts, will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts; and
(b) the Contracts are currently treated as endowment,
annuity or life insurance contracts, under applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), and that it will make
every effort to maintain such treatment and that it will notify the Trust and
the Underwriter immediately upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be so
treated in the future.
2.2. The Trust represents and warrants that
(a) at all times during the term of this Agreement,
Trust shares sold pursuant to this Agreement shall be registered under the
1933 Act, duly authorized for issuance and sold by the Trust to the Company
in compliance with all applicable laws, subject to the terms of Section 2.4
below, and the Trust is and shall remain registered under the 1940 Act. The
Trust shall amend the Registration Statement for its shares under the 1933
Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Trust shall register and qualify the
shares for sale in accordance with the laws of the various states only if and
to the extent deemed advisable by the Trust or the Distributor in connection
with their sale by the Trust to the Company and only as required by Section
2.4;
(b) each Authorized Fund is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and that the
Trust will use its best efforts to maintain such qualification (under
Subchapter M or any successor provision) and that it will notify the Company
immediately upon having a reasonable basis for believing that an Authorized
Fund has ceased to so qualify or that it might not so qualify in the future;
and
(c) the Trust is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it does
and will comply in all material respects with the 1940 Act.
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2.3. The Distributor represents and warrants that it is a member
in good standing of the NASD and is registered as a broker-dealer with the
SEC. The Distributor further represents that it will sell and distribute the
Trust shares in accordance with all applicable securities laws applicable to
it, including without limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.4. Notwithstanding any other provision of this Agreement, the
Trust shall be responsible for the registration and qualification of its
shares and of the Trust itself under the laws of any jurisdiction only in
connection with the sale of shares directly to the Company through the
Distributor. The Trust shall not be responsible, and the Company shall take
full responsibility, for determining any jurisdiction in which any
qualification or registration of Trust shares or the Trust by the Trust may
be required in connection with the sale of the Contracts or the indirect
interest of any Contract in any shares of the Trust and advising the Trust
thereof at such time and in such manner as is necessary to permit the Trust
to comply.
2.5. The Trust makes no representation as to whether any aspect
of its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws or regulations of the
various states.
ARTICLE III
PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. The Trust shall provide such documentation (including a
camera-ready copy of its prospectus) and other assistance as is reasonably
necessary in order for the Company once each year (or more frequently if the
prospectus for the Trust is amended) to have the prospectus for the Contracts
and the Trust's prospectus printed together in one or more documents (such
printing to be at the Company's expense).
3.2. The Trust's prospectus shall state that the Statement of
Additional Information ("SAI") for the Trust is available from the Company,
and the Company shall provide the SAI free of charge to any owner of a
Contract or to any prospective Contract owner who requests the SAI.
Distributor and Trust, as appropriate, agree to provide to Company with as
many copies of the SAI as reasonably requested by Company.
3.3. The Trust, at its expense, shall provide the Company with
copies of its reports to shareholders, proxy material and other
communications to shareholders in such quantity as the Company shall
reasonably require for distribution to the Contract owners. The Company shall
respond to requests for documents regarding the Trust in a manner that is
consistent with SEC rules, including, but not limited to, Item 1(b) of Form
N-1A, which requires requested documents to be sent within three (3) business
days from the date of request.
3.4. The Company shall vote all Trust shares as required by law
and the Mixed and Shared Funding Exemptive Order. The Company reserves the
right to vote Trust shares held in any separate account in each Company's own
right, to the extent permitted by law and the Mixed and Shared Funding
Exemptive Order. The Company shall be responsible for assuring that each of
its separate accounts participating in the Trust calculates voting privileges
in a manner consistent with all legal requirements and the Mixed and Shared
Funding Exemptive Order.
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3.5. The Trust will comply with all applicable provisions of the
1940 Act requiring voting by shareholders.
ARTICLE IV
SALES MATERIAL AND INFORMATION
4.1. Without limiting the scope or effect of Section 4.2 hereof,
the Company shall furnish, or shall cause to be furnished, to the Distributor
each piece of sales literature or other promotional material (as defined
hereafter) in which the Trust, its investment adviser or the Distributor is
named at least 15 days prior to its use. No such material shall be used if
the Distributor objects to such use within five (5) Business Days after
receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust
in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Trust shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in annual or semi-annual reports or proxy
statements for the Trust, or in sales literature or other promotional
material approved by the Trust or its designee or by the Distributor, except
with the written permission of the Trust or the Distributor or the designee
of either or as is required by law.
4.3. The Distributor or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material prepared by the Distributor in which
the Company and/or the Company's Account is named at least 15 days prior to
its use. No such material shall be used if the Company or its designee object
to such use within five (5) Business Days after receipt of such material.
4.4. Neither the Trust nor the Distributor shall give any
information or make any representations on behalf of the Company or
concerning the Company, each Account, or the Contracts other than the
information or representations contained in a registration statement or
prospectus for the Contracts, as such registration statement and prospectus
may be amended or supplemented from time to time, or in published reports for
each Account which are in the public domain or approved by the Company for
distribution to Contract owners, or in sales literature or other promotional
material approved by the Company or its designee, except with the written
permission of the Company or as is required by law.
4.5. For purposes of this Article IV, the phrase "sales
literature or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion pictures, or
other public media), sales literature (i.e. any written communication
distributed or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters, seminar
texts, reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other communications
distributed or made generally available to some or all registered
representatives.
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ARTICLE V
FEES AND EXPENSES
5.1. If the Trust or any Authorized Fund adopts and implements a
plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution
expenses, subject to obtaining any required exemptive orders or other
regulatory approvals, the Trust or Distributor may make payments to the
Company or to the underwriter for the Account if and in such amounts agreed
to by the parties in writing.
5.2. All expenses incident to performance by the Trust under
this Agreement shall be paid by the Trust to the extent permitted by law. The
Trust shall bear the expenses for the cost of registration and qualification
of the Trust's shares, preparation and filing of the Trust's prospectus and
registration statement, proxy materials and reports, setting the prospectus
and shareholder reports in type, setting in type and printing the proxy
materials, and the preparation of all statements and notices required by any
federal or state law, in each case as may reasonably be necessary for the
performance by it of its obligations under this Agreement. All expenses
incident to the solicitation and tabulation of the Trust's proxy materials
will be paid by the Trust, except postage which will be paid by the Company.
5.3. The Company shall bear the expenses of (a) printing and
distributing the Trust's prospectus in connection with sales of the
Contracts, (b) distributing the reports to the Trust's Shareholders who are
owners of the Contracts, (c) mailing the Trust's proxy materials to owners of
the Contracts, and (d) distributing the Trust's SAI to Shareholders who are
owners of the Contracts.
ARTICLE VI
DIVERSIFICATION
6.1 The Trust shall use its best efforts to cause each
Authorized Fund to maintain a diversified pool of investments that would, if
such Fund were a segregated asset account, satisfy the diversification
provisions of Treasury Reg. ss. 1.817-5(b)(1) or (2).
ARTICLE VII
POTENTIAL CONFLICTS
7.1. The Trustees will monitor the Trust for the existence of
any material irreconcilable conflict between the interests of the Contract
owners of all separate accounts investing in the Trust. A material
irreconcilable conflict may arise for a variety of reasons, including: (a) an
action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any
Authorized Fund are being managed; (e) a difference in voting instructions
given by variable annuity contract and variable life insurance contract
owners; or (f) a decision by an insurer to disregard the voting instructions
of Contract owners. The Trust shall promptly inform the Company if the
Trustees determine that a material irreconcilable conflict exists and the
implications thereof.
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7.2. The Company will report any potential or existing conflicts
of which it is aware to the Trustees. The Company will assist the Trustees in
carrying out their responsibilities under the Mixed and Shared Funding
Exemptive Order, by providing the Trustees with all information reasonably
necessary for the Trustees to consider any issues raised. This responsibility
includes, but is not limited to, an obligation by the Company to inform the
Trustees whenever Contract owner voting instructions are disregarded.
7.3. If it is determined by a majority of the Trustees, or a
majority of the disinterested Trustees, that a material irreconcilable
conflict exists, the Company shall to the extent reasonably practicable (as
determined by a majority of the disinterested Trustees), take, at the
Company's expense, whatever steps are necessary to remedy or eliminate the
material irreconcilable conflict, up to and including: (1) withdrawing the
assets allocable to some or all of the separate accounts from the Trust or
any Authorized Fund thereof and reinvesting such assets in a different
investment medium, including (but not limited to) another series of the
Trust, or submitting the question whether such segregation should be
implemented to a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., annuity contract
owners, life insurance contract owners, or variable contract owners of one or
more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Contract owners the option of making
such a change; and (2) establishing a new registered management investment
company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by a Company to disregard Contract owner voting instructions and
that decision represents a minority position or would preclude a majority
vote, that Company may be required, at the Trust's election, to withdraw the
affected Account's investment in one or more portfolios of the Trust and
terminate this Agreement with respect to such Account; provided, however,
that such withdrawal and termination shall be limited to the extent required
by the foregoing material irreconcilable conflict as determined by a majority
of the disinterested Trustees. No charge or penalty shall be imposed as a
result of such withdrawal. Any such withdrawal and termination must take
place within six (6) months after the Trust gives written notice that this
provision is being implemented, and until the end of that six month period,
the Distributor and Trust shall, to the extent permitted by law and any
exemptive relief previously granted to the Trust, continue to accept and
implement orders of the Company for the purchase (and redemption) of shares
of the Trust.
7.5. If a material irreconcilable conflict arises because of a
particular state insurance regulator's decision applicable to the Company to
disregard Contract owner voting instructions and that decision represents a
minority position that would preclude a majority vote, then the Company may
be required, at the Trust's direction, to withdraw the affected Account's
investment in one or more Authorized Funds of the Trust; provided, however,
that such withdrawal and termination shall be limited to the extent required
by the foregoing material irreconcilable conflict as determined by a majority
of the disinterested Trustees. Any such withdrawal and termination must take
place within six (6) months after the Trust gives written notice that this
provision is being implemented, unless a shorter period is required by law,
and until the end of the foregoing six month period (or such shorter period
if required by law), the Distributor and Trust shall, to the extent permitted
by law and any exemptive relief previously granted to the Trust, continue to
accept and implement orders by that Company for the purchase
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(and redemption) of shares of the Trust. No charge or penalty will be
imposed as a result of such withdrawal.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement,
a majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any material irreconcilable conflict. Neither the
Trust nor the Distributor shall be required to establish a new funding medium
for the Contracts, nor shall the Company be required to do so, if an offer to
do so has been declined by vote of a majority of Contract owners materially
adversely affected by the material irreconcilable conflict. In the event that
the Trustees determine that any proposed action does not adequately remedy
any material irreconcilable conflict, then the Company will withdraw the
Account's investment in one or more Authorized Funds of the Trust and
terminate this Agreement within six (6) months (or such shorter period as may
be required by law or any exemptive relief previously granted to the Trust)
after the Trustees inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall
be limited to the extent required by any such material irreconcilable
conflict as determined by a majority of the disinterested Trustees. No charge
or penalty will be imposed as a result of such withdrawal.
7.7. The responsibility to take remedial action in the event of
the Trustees' determination of a material irreconcilable conflict and to bear
the cost of such remedial action shall be the obligation of the Company, and
the obligation of the Company set forth in this Article VII shall be carried
out with a view only to the interests of Contract owners.
7.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the 1940 Act or the rules promulgated thereunder with respect to
mixed or shared funding (as defined in the Mixed and Shared Funding Exemptive
Order) on terms and conditions materially different from those contained in
the Mixed and Shared Funding Exemptive Order, then (a) the Trust and/or the
Participating Insurance Companies, as appropriate, shall take such steps as
may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
3.4, 3.5, 7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement shall continue in
effect only to the extent that terms and conditions substantially identical
to such Sections are contained in such Rule(s) as so amended or adopted.
7.9. The Company has reviewed the Mixed and Shared Funding
Exemption Order and hereby assumes all obligations referred to therein which
are required, including, without limitation, the obligation to provide
reports, material or data as the Trustees may request, as conditions to such
order, to be assumed or undertaken by the Company.
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnification by the Company
8.1. (a). The Company shall indemnify and hold harmless the
Trust, the Distributor and ING Pilgrim Investments, LLC (the "Adviser"), and
each of the Trustees, directors of the Distributor or the Adviser, officers,
employees or agents of the Trust, the Distributor or the
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Adviser, and each person, if any, who controls the Trust, Adviser or the
Distributor within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 8.1) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company which consent may not be
unreasonably withheld) or litigation expenses (including reasonable legal and
other expenses), to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Trust's shares or
the Contracts or the performance by the parties of their obligations
hereunder and:
(i) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact contained
in a registration statement, prospectus or SAI for the
Contracts or contained in the Contracts or sales literature
for the Contracts (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the
Trust for use in the registration statement, prospectus or SAI
for the Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of written statements or
representations (other than statements or representations
contained in the Trust's registration statement or prospectus,
or in sales literature for Trust shares not supplied by the
Company, or persons under its control) or wrongful conduct of
the Company or its agents or employees or persons under its
control, with respect to the sale or distribution of the
Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature of the Trust or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading if such a statement or omission was made in
reliance upon information furnished to the Trust or the
Distributor by or on behalf of the Company; or
(iv) arise out of or result from any breach of any material
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 8.1(b) and 8.1(c)
hereof.
8.1. (b) The Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party
to the extent such may arise from such Indemnified Party's willful
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misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations or duties under this Agreement or to the Trust,
whichever is applicable.
8.1. (c) The Company shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the
Company in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party shall
have received notice of such service on any designated agent), on the basis
of which the Indemnified Party should reasonably know of the availability of
indemnity hereunder in respect of such claim but failure to notify the
Company of any such claim shall not relieve the Company from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case
any such action is brought against the Indemnified Parties, the Company shall
be entitled to participate, at the Company's expense, in the defense of such
action. The Company also shall be entitled to assume the defense thereof,
with counsel satisfactory to the Indemnified Party named in the action. After
notice from the Company to such Indemnified Party of the Company's election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Company will not
be liable to such Indemnified Party under this Agreement for any legal or
other expenses subsequently incurred by such Indemnified Party independently
in connection with the defense thereof other than reasonable costs of
investigation.
8.1. (d) The Distributor shall promptly notify the Company
of the commencement of any litigation or proceedings against the Trust or the
Distributor in connection with the issuance or sale of the Trust Shares or
the Contracts or the operation of the Trust.
8.1. (e) The provisions of this Section 8.1 shall survive
any termination of this Agreement.
8.2. INDEMNIFICATION BY THE DISTRIBUTOR
8.2. (a) The Distributor shall indemnify and hold harmless
the Company and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act and any director, officer, employee or
agent of the foregoing (collectively, the "Indemnified Parties" for purposes
of this Section 8.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Distributor which consent may not be unreasonably withheld) or litigation
(including reasonable legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or acquisition of
the Trust's shares or the Contracts or the performance by the parties of
their obligations hereunder and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in a
registration statement, prospectus, or SAI for the Trust or
the sales literature for the Trust prepared by the Trust or
Distributor (or any amendment or supplement to any of the
foregoing), or arise
11
out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as
to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Distributor or
Trust by or on behalf of the Company for use in sales
literature (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or Trust
shares; or
(ii) arise out of or as a result of written statements or
representations (other than statements or representations
contained in the registration statement, prospectus, SAI or
sales literature for the Contracts not supplied by the
Distributor or persons under its control) of the Distributor
or persons under its control, with respect to the sale or
distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI or sales literature covering the
Contracts, or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to the Company by or on behalf of the Distributor;
or
(iv) arise out of or result from any breach of any material
representation and/or warranty made by the Distributor or the
Trust in this Agreement or arise out of or result from any
other material breach of this Agreement by the Distributor or
the Trust; as limited by and in accordance with the provisions
of Sections 8.2(b) and 8.2(c) hereof.
8.2. (b) The Distributor shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party
as such may arise from such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to the Company or the Account,
whichever is applicable.
8.2. (c) The Distributor shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the
Distributor in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall have
been served upon such Indemnified Party (or after such Indemnified Party
shall have received notice of such service on any designated agent) on the
basis of which the Indemnified Party should reasonably know of the
availability of indemnity hereunder in respect of such claim, but failure to
notify the Distributor of any such claim shall not relieve the Distributor
from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, the Distributor will be entitled to participate, at its own expense,
in the defense thereof. The
12
Distributor also shall be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnified Party named in the action. After
notice from the Distributor to such Indemnified Party of the Distributor's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the
Distributor will not be liable to such Indemnified Party under this Agreement
for any legal or other expenses subsequently incurred by such Indemnified
Party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.2. (d) The Company shall promptly notify the Distributor,
the Adviser, and the Trust of the commencement of any litigation or
proceedings against it or any of its officers or directors, in connection
with the issuance or sale of the Contracts or the operation of each Account.
8.2. (e) The provisions of this Section 8.2 shall survive
any termination of this Agreement.
ARTICLE IX
APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Delaware.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 acts, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the SEC may grant (including, but not limited to, the Mixed
and Shared Funding Exemptive Order) and the terms hereof shall be interpreted
and construed in accordance therewith.
ARTICLE X
TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party, with respect to some or
all of the Funds, upon sixty (60) days' advance written notice to the other
parties; or
(b) at the option of the Trust or the Distributor in
the event that formal administrative proceedings are instituted against the
Company by the NASD, the SEC, any State Insurance Commissioner or any other
regulatory body regarding the Company's duties under this Agreement or
related to the sales of the Contracts, with respect to the operation of any
Account, or the purchase of the Trust shares, provided, however, that the
Trust or the Distributor determines in its sole judgment exercised in good
faith, that any such administrative proceedings will have a material adverse
effect upon the ability of the Company to perform its obligations under this
Agreement; or
(c) at the option of the Company in the event that
formal administrative proceedings are instituted against the Trust or
Distributor by the NASD, the SEC, or any state securities or insurance
department or any other regulatory body in respect of the sale of shares of
13
the Trust to the Company, provided, however, that the Company determines in
its sole judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of the Trust
or Distributor to perform its obligations under this Agreement; or
(d) with respect to any Account, upon requisite vote of
the Contract owners having an interest in such Account (or any subaccount) to
substitute the shares of another investment company for the corresponding
Fund shares of the Trust in accordance with the terms of the Contracts for
which those Fund shares had been selected to serve as the underlying
investment media. The Company will give 30 days' prior written notice to the
Trust of the date of any proposed vote to replace the Trust's shares;
(e) with respect to any Authorized Fund, upon 30 days'
advance written notice from the Distributor to the Company, upon a decision
by the Distributor to cease offering shares of the Trust for sale; or
(f) at the option of any party to this Agreement, upon
written notice to the other parties, upon another party's material breach of
any provision of this Agreement which material breach is not cured within
thirty (30) days of said notice.
10.2. It is understood and agreed that the right of any party
hereto to terminate this Agreement pursuant to Section 10.1 (a) may be
exercised for any reason or for no reason.
10.3. No termination of this Agreement shall be effective unless
and until the party terminating this Agreement gives prior written notice to
all other parties to this Agreement of its intent to terminate, which notice
shall set forth the basis for such termination. Such prior written notice
shall be given in advance of the effective date of termination as required by
this Article X.
10.4. Notwithstanding any termination of this Agreement, subject
to Sections 1.2 and 10.5 of this Agreement, the Trust and the Distributor
shall, at the option of the Company, continue to make available additional
shares of the Trust pursuant to the terms and conditions of this Agreement,
for all Contracts in effect as of the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
subject to Sections 1.2 and 10.5 of this Agreement, the owners of the
Existing Contracts shall be permitted to reallocate investments in the Trust,
redeem investments in the Trust and/or invest in the Trust upon the making of
additional purchase payments under the Existing Contracts. The parties agree
that this Section 10.4 shall not apply to any termination under Article VII
and the effect of such Article VII termination shall be governed by Article
VII of this Agreement.
10.5. If any party terminates this Agreement with respect to any
Authorized Fund pursuant to the provisions under Article X, the Agreement
shall nevertheless continue in effect as to any shares of the Trust that are
outstanding as of the date of such termination (the "Initial Termination
Date"). This continuation shall extend to the earlier of (a) the date as of
which an Account no longer owns shares of the affected Fund or (b) the date
(the "Final Termination Date") as of 180 days following the Initial
Termination Date, or, at the Distributor's option, such later date as is
necessary for the Company to obtain a substitution order from the SEC, the
application for which the Company will diligently pursue.
14
10.6. The Company shall not redeem Trust shares attributable to
the Contracts (as opposed to Trust shares attributable to the Company's
assets held in either Account) except (i) as necessary to implement Contract
owner initiated transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general
application (hereinafter referred to as a "Legally Required Redemption").
Upon request, the Company will promptly furnish to the Trust and the
Distributor an opinion of counsel for the Company, reasonably satisfactory to
the Trust, to the effect that any redemption pursuant to clause (ii) above is
a Legally Required Redemption. Furthermore, except in cases where permitted
under the terms of the Contracts, subject to Sections 1.2 and 10.5 of this
Agreement, the Company shall not prevent owners from allocating payments to
an Authorized Fund that was otherwise available under the Contracts without
first giving the Trust or the Distributor 90 days' written notice of its
intention to do so.
ARTICLE XI
NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust:
Pilgrim Variable Products Trust
0000 Xxxx Xxxxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attn: _________________________
If to the Distributor:
ING Pilgrim Securities, Inc.
0000 Xxxx Xxxxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attn: _________________________
If to the Company:
[Insurance Company]
ARTICLE XII
MISCELLANEOUS
12.1. A copy of the Agreement and Declaration of Trust is on
file with the Secretary of State of the State of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of
the Trust as Trustees and not individually and that the obligations of or
arising out of this instrument, including without limitation Article VI, are
not binding upon any of the Trustees or shareholders individually but binding
only upon the assets and property of the Trust.
15
12.2. The Fund and the Distributor acknowledge that the
identities of the customers of the Company or any of its affiliates, except
for customers of the Fund or the Distributor or their affiliates
(collectively, the "Company Protected Parties" for purposes of this Section
12.2), information maintained regarding those customers, and all computer
programs and procedures or other information developed or used by the Company
Protected Parties or any of their employees or agents in connection with the
Company's performance of its duties under this Agreement are the valuable
property of the Company Protected Parties. The Fund and the Distributor agree
that if they come into possession of any list or compilation of the
identities of or other information about the Company Protected Parties'
customers, or any other information or property of the Company Protected
Parties, other than such information as is publicly available or as may be
independently developed or compiled by the Fund or the Distributor from
information supplied to them by the Company Protected Parties' customers who
also maintain accounts directly with the Fund or the Distributor, the Fund
and the Distributor will hold such information or property in confidence and
refrain from using, disclosing or distributing any of such information or
other property except: (a) with the Company's prior written consent; or (b)
as permitted without customer consent under Title V of the Xxxxx-Xxxxx-Xxxxxx
Act and the applicable regulations thereunder or other applicable law. The
Company acknowledges that the identities of the customers of the Fund, the
Distributor or any of their affiliates (collectively, the "Fund Protected
Parties" for purposes of this Section 12.2), information maintained regarding
those customers, and all computer programs and procedures or other
information developed or used by the Fund Protected Parties or any of their
employees or agents in connection with the Fund's or the Distributor's
performance of their respective duties under this Agreement are the valuable
property of the Fund Protected Parties. The Company agrees that if it comes
into possession of any list or compilation of the identities of or other
information about the Fund Protected Parties' customers, or any other
information or property of the Fund Protected Parties, other than such
information as is publicly available or as may be independently developed or
compiled by the Company from information supplied to them by the Fund
Protected Parties' customers who also maintain accounts directly with the
Company, the Company will hold such information or property in confidence and
refrain from using, disclosing or distributing any of such information or
other properly except: (a) with the Fund's or the Distributor's prior written
consent; or (b) as required by law or judicial process. Each party
acknowledges that any breach of the agreements in this Section 12.2 would
result in immediate and irreparable harm to the other parties for which there
would be no adequate remedy at law and agree that in the event of such a
breach, the other parties will be entitled to equitable relief by way of
temporary and permanent injunctions, as well as such other relief as any
court of competent jurisdiction deems appropriate.
12.3. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.4. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
12.5. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
16
12.6. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance regulators)
and shall permit such authorities reasonable access to its books and records
in connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
12.7. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies
and obligations, at law or in equity, which the parties hereto are entitled
to under state and federal laws.
12.8. Notwithstanding any other provision of this Agreement, the
obligations of the Trust and the Distributor are several and, without
limiting in any way the generality of the foregoing, neither such party shall
have any liability for any action or failure to act by the other party, or
any person acting on such other party's behalf.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
[INSURANCE COMPANY]
By its authorized officer,
--------------------------------------------------
Name:
Title:
PILGRIM VARIABLE PRODUCTS TRUST
By its authorized officer,
--------------------------------------------------
Name:
Title:
ING PILGRIM SECURITIES, INC.
By its authorized officer,
-------------------------------------------------
Name:
Title:
17
SCHEDULE A
Contracts and Separate Accounts
A-1
SCHEDULE B
PILGRIM VARIABLE PRODUCTS TRUST
FUNDS
Pilgrim VP MagnaCap Portfolio
Pilgrim VP Research Enhanced Index Portfolio
Pilgrim VP Growth Opportunities Portfolio
Pilgrim XX XxxXxx Opportunities Portfolio
Pilgrim VP Growth + Value Portfolio
Pilgrim VP SmallCap Opportunities Portfolio
Pilgrim VP International Value Portfolio
Pilgrim VP High Yield Bond Portfolio
Pilgrim VP Worldwide Growth Portfolio
Pilgrim VP International SmallCap Growth Portfolio
Pilgrim VP International Portfolio
Pilgrim VP Emerging Countries Portfolio
Pilgrim VP Growth and Income Portfolio
Pilgrim VP LargeCap Growth Portfolio
Pilgrim VP Financial Services Portfolio
Pilgrim VP Convertible Portfolio
B-1
